Resilience 2021: ‘Adapt, Improvise And Overcome’

What does it take to build an anti-fragile company that can take a punch and throw one, too? We asked CEOs across a range of sectors for top-of-mind takeaways for 2021.

For Bridgewater Interiors, the best way to bounce back from a pandemic is to double down on what put the $2 billion maker of automotive seats in its strong position before the virus hit. The Detroit-based manufacturer emphasized flexibility, consistency, and culture, as Bridgewater reopened its plants in Motown and in nearby Warren, Michigan, and soon soared past its pre-COVID-19 heights.

“The best you can do is adopt the mindset that we’ll adapt, improvise, and overcome, and to drive that attitude and approach down through our organization,” says CEO Ronald Hall Jr., whose company supplies seating systems for high-profile, high-profit vehicles including Fiat Chrysler’s Ram pickup trucks, the Ford Mustang, and the Honda Pilot SUV.

The challenge in establishing resilience is that CEOs don’t know if their companies have it until they need it. While business resilience is easy to define—the ability to bounce back from a profound reversal or change—it can’t be proven until companies are under fire.

Only now, amid the pandemic and the accompanying recession and societal strains, are company chiefs finding out if they’ve truly been successful in establishing resilience.

“It’s having a plan that lets you survive when the world ends,” says Blair Silverberg, CEO of Capital, a fin-tech investment company based in New York City. “In good times, you never need it, and after many good decades, people forget why resilience is necessary. Then COVID hits, and we all scramble to adapt, wondering how this is even possible.”

The most important thing for CEOs is to look beyond current circumstances and build resilience for the future. “A company’s foresight, ability to earn, and adaptability will set it apart now,” says Rose Gailey, a Global Managing Partner at executive search firm Heidrick & Struggles. “Companies strong in these areas have leaders who are future-focused, demonstrate a growth mindset, are able to pivot quickly in times of rapid disruption and maintain resilience to navigate their organizations.”

There’s a long history of business resilience available for study, including how many American businesses recovered robustly from the financial-system collapse and Great Recession of 2008 and 2009, from massive cybersecurity attacks, Trump-era tariffs on Chinese goods, and natural disasters ranging from the earthquake and tsunami in Japan in 2011 to the string of hurricanes that hit the U.S. mainland in 2020.

COVID-19 and the resulting recession comprise an unprecedented scenario because they have tested many companies in nearly every industry to demonstrate resilience—or, possibly, go out of business. But another big blow will come out of nowhere at some point, and that’s why CEOs must be forward-looking even as they try to put the pieces back together now.

Quality and People

For Hall, summoning flexibility to comply with pandemic protocols was crucial to getting Bridgewater’s plants up and running in May after a six-week halt. Hall set up weather-resistant tents over an area of a few thousand square feet in the parking lot of the Warren plant “to create a space on the property where employees could take downtime safely,” he says. For winter, the company made the structures semi-permanent, heated them, and ran electricity to the area for microwaves and vending machines.

Focusing on consistency of performance also has been key. Bridgewater recently garnered the company a couple of quality awards from J.D. Power & Associates, which helped guarantee an expansion of business during COVID that is increasing its workforce to about 2,600 people from about 2,400.

As he walks the floor of the company’s factory in the commercially rising industrial precinct of downtown Detroit, Hall notes he has ensured superior manufacturing quality by relying on experienced assemblers. He points to racks of auto seats that will soon be swathed in expensive leather. “Robots are more and more capable, and at cost levels that allow bigger returns over time,” he allows. “But I’d bet $100 that it will be a while before a machine can invert trim cover over a seat, snugly, without tearing the foam.”

Indeed, Hall’s appreciation of human capital has played a big role in the company’s resilience. “More than other firms, we’re a jobs company,” Hall says. “High-end assembly is a very commoditized space. We don’t have IP we’re selling at a premium. We don’t have engineering or a design staff organic to the company. It’s all about the men and women at Bridgewater Interiors who are bringing in the parts, building the car seats, and managing the people.”

When the pandemic hit, it was evident Bridgewater benefited from “having a long average employee tenure,” Hall says. “Everyone from a shipping clerk to a manufacturing engineer understands the business very well and where to look to help us get better—to build faster or safer or to cut costs or whatever.” More than 40% of the management team are Bridgewater’s former hourly workers, he says. “You hope that’s part of the culture.”

Hall also believes in human diversity as a major element of culture. Bridgewater was started by his father, Ronald Hall Sr., in 1998 as a joint venture between the family’s Epsilon Technologies holding company and Adient, a major first-tier auto supplier that used to be part of Johnson Controls. Bridgewater is a certified Minority Business Enterprise.

Bridgewater’s commitment to diversity included its own purchase last year of $254 million in goods from other minority-owned enterprises, about 17% of its total outlay to vendors.

“Those are numbers other billion-dollar-revenue companies aren’t matching,” Hall says. Building minority communities in Detroit is part of the company’s mission as well, he says.

A former artillery captain in the Persian Gulf war, Hall was brought into the company by his father, who died in 2016. One lesson in business resilience he picked up working with his dad was to stick with the company’s knitting, which meant making seats and, eventually, not bothering to dabble with other components. Hall Jr. also throttled back the company’s efforts to obtain contracts for more seat systems for sedans, which have fallen out of favor quickly among U.S. car buyers while SUVs and pickup trucks have boomed.

“People will always need seats, no matter what happens to automobiles,” Dad told Hall Jr. “And he also said, ‘Never try to outsmart the market.’”

Below, in their own words, CEOs share their strategies for staying resilient:

Flipping to the Office of the Future

Tracy Lorenz, CEO, Triumph Higher Education Group / Schaumburg, Illinois

We moved to a new headquarters building in 2018, but for our 400-plus employees, we flipped them all to remote work during the pandemic. Even so, we’ve added 100 more employees during this time. The way we worked has changed dramatically, with minimal, if any, disruption to our residential or online students.

We’re going to emerge as a better organization, and I don’t see anything going back to the way it was before. There will be a flexible work environment for those in the office. And rather than just meetings, I see the office as a place for the enhancement of our culture, for promoting our mission and vision, and team building. We don’t need everyone there at the same time to be effective. We do want to bring people together—it’s human nature to want to socialize.

Leapfrog into the Future

Barbara Humpton, CEO, Siemens USA / Washington, D.C.

We already had an agenda for 2030, but over the summer, we put together a team to look again at what we had to do today to prepare for that future. How did COVID affect our plan? We’re literally a company of engineers and problem solvers, so when everyone was getting depressed and angry and fearful, we knew that what everyone needed was a good problem to solve.

Resilience says we can get back to where we are, but we wanted to go beyond that, to become “anti-fragile.” So, what about things that can get stronger from disruption? We asked our team, “How can we use a moment like this to actually build muscle?” For instance, not just, “How do you replace what you used to do virtually, but how to you replace something that was virtually impossible before?” That includes remote commissioning of mechanical equipment on site, which used to involve armies of people on site observing things and taking measurements.

Now, we have built-in sensors and an expert somewhere who’s there virtually and able to show the factory owner that, indeed, their operations are performing as expected. These are the kinds of things that, by using a moment like this to spark innovation, we can come out stronger and accelerate the plans we already have in place.

Always Look for Ways to Diversify

Scott Acton, CEO, Forte Specialty Contractors / Las Vegas

We were big in construction in theme parks and hospitality generally, so we got beat up big time in the 2008 to 2009 downturn. Fool me twice—shame on me. I was always thinking we’d be faced with another challenge at some point. I just didn’t know what direction it would come from.

So, a few years ago, I turned our focus as a construction company based on experiences to satisfying the housing wishes of our commercial clients. For these visionary clients, I wanted to deliver faster than anyone else could. Instead of 18 to 24 months, we figured out how to build a luxury home in 13 months or less. With COVID, that became a real commodity, and our market has exploded. What was 20% of our business is now 60%.

Be Honest with Everyone

Andy Wiederhorn, CEO, FAT Brands / Beverly Hills, California

We had to be honest with ourselves about assessing the situation with COVID and also coach our franchisees—for Johnny Rockets, Fatburger, Ponderosa, and our other chains—giving them direction and tools about seeking relief from landlords and seeking PPP loans and protecting employees. That included telling them to be prepared to let people go and not pay landlords and renegotiate material contacts if they couldn’t get started again. And pivoting in our advice to them once we understood that the SBA [pandemic] loan program wasn’t going to work for them at all.

We also are honest with them about our marketing plans. We tell them we think a certain approach will work, but if it doesn’t, we’ll pull it and run something else. We won’t get over-invested in a strategy that doesn’t work. We’ll just pivot immediately in a different direction. Same with the new floor of office space for which we signed a lease in December; now we probably won’t need it for three years. But there’s not much we can do about it.

Focus on Manufacturing Technology

Annette Clayton, CEO and President, Schneider Electric North America / Boston

We’ve spent more than two decades on our supply chain, optimizing transportation lanes and inventory. It’s been optimized to the point where any black-swan event creates the potential for disruption. So, COVID put a big spotlight on it for our customers and ourselves.

Now we’ve looked at how to make our supply chain anti-fragile, looking upstream and downstream at how to do that. We were already very regional globally in our production, so it hasn’t been a matter of decoupling from anywhere. It’s more around controlling production closer to the point of consumption and about using technology to drive efficiency. Business resilience is driven by not having interruptions in the supply chain. So, we’re spending an additional $40 million to modernize our U.S. manufacturing plants in Iowa, Kentucky, Nebraska, and Texas.

We’ve also created advanced “lighthouse factories” that earn the World Economic Forum designation. The latest one, in Lexington, Kentucky, is a 62-year-old plant where we’re breaking down barriers to sharing data in the factory. This effort is also driving great efficiencies and more resilience. Lighthouse factories have 20% reductions in time to repair and a 30% reduction in maintenance costs, reducing our time to recover when there is an issue.

Another advantage is that we’re going to be able to attract higher levels of talent and skilled labor, with young people who don’t want to walk into a dusty, dirty factory but want to leverage technology in their work.

Strengthen Global Supply Chains

Ralph Taylor, CEO, Sysmex America / Chicago

We provide diagnostic testing to hospitals, so we had contingencies in place to recover from natural disasters. But we hadn’t dug as deeply as we could have into how to source supplies in a major healthcare event and maintain our support of our customer base. So, we’ve looked at making sure we have stronger supply chains to source key resources so our company can keep functioning.

We get most of our reagents from our parent company in Japan. But we are trying to make sure even there that we can get key resources. We also revisited our procurement groups, confirming if someone is a primary supplier to us, that we’re one of their priority customers. They need to understand our role as an essential supplier in delivering healthcare and the importance of our role, even if we may not be one of their biggest customers.

In our factories, we use a lot of machine-to-machine IoT to monitor and control the performance of our instruments, and we can do things like calibrate them remotely. It doesn’t require us to send a service engineer. We’re doing more of that because people don’t want others going into their labs. Also, during COVID-19, as customers buy new equipment, we have been doing virtual symposia to help them learn and operate their systems. We’re trying to make that more of a sales environment. People still want to buy from people and want personal interaction. So we’ve worked on being able to do virtual product demos.

Move Fast, Then Move Faster

Nick Grasberger, CEO, Harsco / Camp Hill, Pennsylvania

We’ve been pleased with how our team responded with a very active, aggressive and early COVID-mitigation plan. But one learning was that so many people were predicting that the pandemic would be over relatively quickly, so we didn’t take the deeper cost actions that maybe we would have if we’d felt this was going to last a year or more.

If we ever have a similar situation, unless there’s something that suggests a vaccine can be created more quickly, we’d all take a more negative view, be a little more realistic about our approach to the situation, hunker down, tweak messaging a bit to our employees and take more structural actions more quickly.

Accelerate into New Markets

Paula Marshall, CEO, Bama Companies / Tulsa

We make all of McDonald’s apple pies and baked goods for other big chains like Pizza Hut, but we never had put meat in our products, and now there are more and more hand-held sandwiches. So, we got USDA certification of one of our plants, anticipating diversification at some point.

Now, we’re speeding it up because of the downturn for some of our restaurant customers and using the slack in that open factory line. Plus, there aren’t a lot of our competitors innovating right now, including the development people at big companies. A lot of R&D kitchens aren’t open for people to look at products, so they’re trying to do it out of their homes. So, we’re taking advantage. For example, we went to Qwik-Trip, a big convenience-store chain in the Midwest, and had everyone meet at one of their stores and showed them our hand-held meat products in a very safe environment. We even conducted some meetings outside and sent some products to people’s houses.

Build in Speed and Responsiveness

Jeff Dunn, CEO, Bolthouse Farms / Bakersfield, California

I worked for Coca-Cola for a long time, a company that hit lots of natural disasters. So, when I returned as CEO again last year after Campbell Foods sold off Bolthouse, I re-engineered it with two objectives: ensuring the health and safety of our employees and maintaining essential business continuity with our customers. As a result, when COVID hit, we were able to meet a 25% surge in demand for carrots during the first six weeks of the pandemic and service customers in a period where many people had trouble shipping.

That underscored a couple of big principles for resilience for me. One, relative to periods of disruption like we’re seeing, speed is the most important variable. Our ability to move quickly and change protocols based on new information has been one of the most important things for us during the pandemic. And what supports that speed? Really tight communications flows internally and externally. For example, we have a health-and-safety team that I chair and that meets three times a week. Every other day, we’re adjusting. That’s a huge lesson for us.

Go and See Your People

David Corcoran, CEO, Censys / Ann Arbor, Michigan

Although you can operate an entirely remote company, there’s a level of trust that’s built in person that you still can’t build over Zoom. It’s body language and a number of other things that you gain in person. So, over the last few months, I traveled by rental car to 42 meetings with employees, including visits to five different states over 24 days.

We’re actively moving to become a hybrid-first company, so when our office opens up again in 2021, a large portion of it will be a co-working space. But I would like to see each employee in person quarterly, and before my road trip we hadn’t been with each other in six months.

I spent an hour or two with everyone, on their front porch or in a park or eating cheese on the Allegheny River. It was super helpful. It gave people a chance to be vulnerable; and I would tell them stuff that I was scared about, like, “I’m a little nervous about our strategy on X,’ or ‘how fast we’re moving on Y.’ I was surprised how quickly people responded, and I came back with a treasure trove of policy suggestions.

Now, I’m going to do this once a year, face-to-face, with as many people as I can. Being able to get in front of people and see where and how they live and meet their families and kids, and even parents, helps you understand your employees and their needs better. So, when situations happen, you’re just better prepared by having more intimate knowledge of your employees.

Turn to Battle-Tested Managers

Jay Baker, CEO, Jamestown Plastics / Brocton, New York

The underlying principle of resilience is primarily attitude. You need the type of attitude that the Greatest Generation brought forth: You’re not going to let the bastards get you down; you keep fighting. And if you want the same unsinkable Molly Brown attitude that you’re not going to give in or give up, you acquire personnel who have the same attitude.

That’s why we have always tried to staff with folks who have military backgrounds. Both of our operations managers, for instance, are ex-military. So, the people in our managerial positions understand mission-critical. They’re not into fluff. The concept of failure is not an option.

Also, they can make tough choices. We were deemed an essential manufacturer during the pandemic because we were asked to make PPE, but in 2009 and 2010 we had to make some very tough choices. We had to lay people off. We knew we were all in the same canoe. Fortunately, we were able to bring many of them back.

Written by:  Dale Buss, long-time Contributor to Chief Executive, for Chief Executive.